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CIRCULAR No

CIRCULAR No. 1818/1999/TT-BKHCNMT OF OCTOBER 21, 1999 GUIDING THE DETERMINATION AND RECOGNITION OF PROJECTS ELIGIBLE FOR SPECIAL INVESTMENT ENCOURAGEMENT UNDER ITEM 5, LIST I, APPENDIX 1 OF THE GOVERNMENT�S DECREE No. 10/1998/ND-CP OF JANUARY 23, 1998

(Projects for the production of new materials, precious and rare materials; projects applying new bio-technologies, new technologies for the manufacture of information and telecommunications equipment; electronic and informatic technologies)

Pursuant to the Government�s Decree No. 22-CP of May 22, 1993 on the tasks, powers and organizational apparatus of the Ministry of Science, Technology and Environment;

Pursuant to the Government�s Decree No. 10/1999/ND-CP of January 23, 1998 on a number of measures to encourage and guarantee foreign direct investment activities in Vietnam;

The Ministry of Science, Technology and Environment hereby guides the determination and recognition of projects eligible for special encouragement of investment under Item 5, List 1, Appendix I of Decree No. 10/1998/ND-CP as follows:

I. GENERAL PROVISIONS:

1.1. Subjects and scope of application

This Circular prescribes the criteria, procedures and order for evaluation and certification of eligibility for preferential treatment with regard to foreign direct investment projects in Vietnam which fall under the category of projects eligible for special encouragement of investment under Item 5, List I, Appendix I of Decree No. 10/1998/ND-CP (hereinafter referred to as projects of special investment encouragement for short). Specifically, they include:

a/ Projects for the production of new materials, precious and rare materials;

b/ Projects on the application of new bio-technologies;

c/ Projects on new technologies for the manufacture of information and telecommunications equipment;

d/ Projects on electronic technologies and informatic technologies.

1.2. Preferential regime

The above-mentioned projects which satisfy the criteria specified in this Circular shall be entitled to regimes of special investment encouragement stipulated in the Government�s Decree No. 12-CP of February 18, 1997 detailing the implementation of the Law on Foreign Investment in Vietnam and Decree No. 10/1998/ND-CP.

1.3. Interpretation of terms

A number of terms used in this Circular are construed as follows:

a/ "New materials" are various kinds of new materials manufactured in Vietnam and on the list of raw materials promulgated by the Ministry of Science, Technology and Environment. This list may be amended and supplemented to be suitable to each period of time.

b/ "Precious and rare materials" are those on the list of precious and rare materials promulgated by the Ministry of Science, Technology and Environment. This list may be amended and supplemented to be suitable to each period of time.

c/ "New technologies" are those applied in Vietnam and on the list of new technologies determined by the Ministry of Science, Technology and Environment. This list may be amended and supplemented to be suitable to each period of time.

d/ "An advanced technological line" is a specialized production line in which programmed automatic equipment must represent at least one third of the value of the line; a the production line in which exists no heavy manual labor process; a production line which is arranged in a space where the industrial hygiene, labor safety and environmental hygiene criteria are ensured; and in which the enterprise�s managerial system must be an advanced one (a number of phases are computerized, such as: production management, supplies, marketing�).

e/ High-tech components and parts:

- In the electronic field, they are circuit boards, condensers, potentiometers, impedances, relays, wire coils, electron guns, assorted picture tubes, ICs, electronic chips� used in electronic products.

- In the fields of automation, mechanics and engineering, they are details and parts with the second or higher degree of precision, hydraulic and compressed air regulating and controlling vans, CAM mechanisms, gyroscope sets, assorted precision tools, precision comparing and measuring meters,

Computer softwares used in the systems to control automatic equipment, communication equipment, the technological management and business management equipment systems shall be also regarded as high-tech parts.

II. CRITERIA FOR DETERMINING PROJECTS OF SPECIAL INVESTMENT ENCOURAGEMENT

II.1. CRITERIA FOR DETERMINING PROJECTS FOR THE PRODUCTION OF NEW MATERIALS, PRECIOUS AND RARE MATERIALS

A. Projects for the production of new materials:

1. The project�s products must be new materials (Appendix 1).

2. The technological line is an advanced one.

3. Meeting environmental standards prescribed by the State of Vietnam.

B. Projects for the production of precious and rare materials

1. The project�s products are precious and rare materials, excluding projects for the exploitation or fashioning of precious and rare materials (Appendix 2).

2. The technological line is an advanced one.

3. Meeting the environmental standards pres-cribed by the State of Vietnam.

II.2. CRITERIA FOR DETERMINING PROJECTS ON THE APPLICATION OF NEW BIO-TECHNOLOGIES

1. Technologies applied in the projects must be new technologies (Appendix 3).

2. The technological line is an advanced one.

3. The application of new technologies must create high-quality and high-productivity products.

4. Ensuring the biological security norms of the world, the Asian region and Vietnam.

5. Meeting the environmental standards prescribed by the State of Vietnam.

II.3. CRITERIA FOR DETERMINING PROJECTS APPLYING NEW TECHNOLOGIES FOR THE PRODUCTION OF INFORMATION AND TELECOMMUNICATIONS EQUIPMENT

1. Technologies applied in the projects must be new ones (Appendix 4).

2. The technological line is an advanced one.

3. The application of new technologies must create high-quality and high-productivity products.

4. Ensuring the world and the regional economic-technical norms in the field of information and telecommunications.

5. Meeting the environmental standards prescribed by the State of Vietnam.

II.4. CRITERIA FOR DETERMINING ELECTRONIC AND INFORMATIC TECHNOLOGIES PROJECTS

1. Technologies applied in the projects must be on the list of electronic and informatic technologies (Appendix 5).

2. The technological lines must be of advanced level, products can be exported, or products consumed domestically must be of a quality equivalent to that of imported products of the same kind.

3. The project�s scale:

a/ Annual turnover per head must be equivalent to 70,000 USD or more. For enterprises with a legal capital of 30,000,000 USD and a workforce of more than 1,000 people, they shall be deemed to satisfy the criterion specified at this Point a.

b/ The per-capita value of technological equipment is 40,000 USD or more. For enterprises specialized in the production of computer softwares, they shall be deemed to satisfy the criterion specified at this Point b.

c/ The percentage of localization (the percentage of the value of high-tech components and parts made by the enterprises themselves) must represent at least 2% of the annual turnover, or the total value of parts manufactured in Vietnam by the enterprises and other enterprises must represent at least 15% of the annual turnover.

d/ Expenditures for research & development and training activities must represent at least 2% of the annual turnover. If such activities are conducted free of charge, the value of such charge shall be also allowed to be included in the above-said percentage. For enterprises with annual turnover of 10,000,000 USD or more, the annual expenditures for research & development and training must not be lower than 200,000 USD. If enterprises have a technology transfer contract approved by the competent State agency, they shall be deemed to have satisfied the criterion specified at this Point d for the first four years (counted from the time the technology transfer contract is approved).

4. Meeting the world and the regional economic-technical standards in the electronic information field.

5. Meeting the environmental standards prescribed by the State of Vietnam.

III. ORGANIZATION OF IMPLEMENTATION

III.1. Dossiers for registration of projects eligible for special investment encouragement

In order to be considered and certified as projects eligible for special investment encouragement as specified in Part II of this Circular, the project owners shall have to send to the investment license-granting agency the following dossiers:

a/ For new projects, the following papers are required:

- An application for registration of a project eligible for special investment encouragement.

- The exposition on the technology(ies) applied in the project (comparing the contents of the technology(ies) with the criteria specified in this Circular).

This dossier shall be sent together with the dossier of application for the granting of the investment license. The determination and recognition of eligibility for preferential treatment shall be effected simultaneously with the process of evaluation before the granting of investment license. If the applying enterprise satisfies the criteria specified in this Circular, the recognition of its eligibility for preferential treatment shall be written in the investment license.

b/ For on-going projects, the following papers are required:

- An application for registration of a project eligible for special investment encouragement.

- The exposition on the technology(ies) applied in the project (comparing the contents of the technology(ies) with the criteria specified in this Circular).

- A copy of the investment license.

III.2. Competence to consider projects eligible for special investment encouragement

a/ For projects which are granted investment licenses by the Ministry of Planning and Investment: On the basis of the opinions of the Ministry of Science, Technology and Environment certifying the application of technologies in the projects according to the provisions of this Circular, the Ministry of Planning and Investment shall decide the regime of special investment encouragement for the projects.

b/ For investment projects licensed by various agencies according to the assignment of responsibility: On the basis of the opinions of provincial/municipal Science, Technology and Environment Services certifying the application of technologies in the projects according to the provisions of this Circular, the local agencies assigned to grant investment licenses, the Boards for Management of Industrial Parks, Export Processing Zones and High-Tech Parks are authorized to decide the regime of special investment encouragement for the projects.

c/ The agencies tasked to certify the application of technologies in the projects must make the certification within 30 days fore cases where projects are eligible for investment privileges.

d/ In cases where an enterprise is ineligible for preferential treatment as prescribed in Part II of this Circular, the agencies tasked to certify the application of technologies in the projects must reply in writing to the investment license-granting agency, clearly stating the reason therefor within 20 days after they receive the valid dossiers.

e/ If, in the course of operation, an enterprise no longer meets the criteria specified in Part II of this Circular, it shall be suspended from enjoying investment privileges.

Enterprises shall be entitled to lodge complaints with the competent level about their eligibility or ineligibility for privileges in accordance with the Law on Complaints and Denunciations.

IV. IMPLEMENTATION PROVISIONS

This Circular takes effect 15 days after its signing. In the course of implementation if any problem arises, organizations and individuals are requested to report it to the Ministry of Science, Technology and Environment for detailed guidance for settlement.

Minister of Science, Technology and Environment
CHU TUAN NHA

Appendix 1

LIST OF NEW MATERIALS

1. Various kinds of alloy steel of high durability;

2. Various kinds of mechanical abrasion-resistant steel;

3. Spring steel, shock absorbers, mooring flanges;

4. Chemical and thermal corrosion-resistant steel;

5. Molding steel, stainless steel;

6. Low alloy steel of high durability;

7. Low two-phase steel alloy;

8. Metal composite materials;

9. High-voltage electricity-insulating ceramic materials;

10. High-tech ceramic materials (refractory ceramics, abrasion-resistant ceramics) for use in the ceramics, porcelain and walling and flooring tiles making industry;

11. Piezoelectric porcelain;

12. High-voltage electricity-insulating glass materials;

13. Electricity-insulating polymeric porcelain;

14. Composite polymer materials for electric and electronic technical uses under the harsh environmental conditions;

15. Organic electronic materials;

16. Super-pure inorganic oxides;

17. Super-durable materials for use in the silk, fiber, textile and footwear leather industries;

18. Composite materials with polymeric base;

19. Technical rubber materials;

20. Synthetic rubber;

21. Metal-metal glues;

22. Metal-rubber glues;

23. Carbon fiber-polymer composites;

24. Special-purpose paints, oil-, heat- or chemical-proof;

25. Electricity-conducting polymers;

26. Emulsive polymers (Acrylic Copolymer, Styrene Acrylic, Polyvinyl Acetate Copolymer, Polyvinyl Acetate Homopolymer);

27. PVC plastic;

28. Composite condensers;

29. Sensors-manufacturing materials;

30. Electronic ceramic materials;

31. Materials for the production of photonic-electronic components;

32. Materials for the production of various kinds of light amplifying optical fiber;

33. Electronic and photonic materials based on polymers;

34. New materials with energy-storing properties for use in electric and electronic equipment;

35. Polymer materials for medical use;

36. Polymer materials for pharmaceutical use;

37. Polymer materials for cosmetic use;

38. Polymer materials for veterinary use;

39. Polymer-carbon fiber composite materials for medical use;

40. Special polymeric membrane materials;

41. Thin-membrane materials;

42. Exosmotic membrane materials;

43. High-grade magnetic materials;

44. Photonic-electronic and photonic materials;

Appendix 2

LIST OF PRECIOUS AND RARE MATERIALS

1. Titanium materials;

2. Platinum materials;

3 Other precious and rare metal materials (W, Mo);

4. Rare earth metal materials;

5. Rare earth metal oxide materials;

6. Rare earth ferro materials;

7. High-tech materials based on rare earth;

8. Zirconium materials;

9. Strontium materials

10. Artificial diamond materials.

Appendix 3

LIST OF NEW BIO-TECHNOLOGIES

1. Technologies for the production of vaccines of a new generation for human being;

2. Technologies for the production of antibiotics for human being;

3. Technologies for the production of bio-preparations for use in human medical diagnosis and treatment;

4. Technologies for the cell and tissue culture and transplantation for medical use;

5. Technologies for the production of surgical thread and bio-membranes for medical use;

6. Technologies for the preservation, storage and extraction of preparations from blood for use in human medical diagnosis and treatment;

7. Technologies for the production of veterinary vaccines (cattle and poultry) of a new generation;

8. Technologies for the KIT production for diagnosis and treatment of plant and animal diseases;

9. Technologies for the production of plant varieties with improved transplanted tissues, tissue and cell culture, anther culture and genetic modification, which can resist diseases and harmful insects and adverse climatic conditions;

10. Technologies for the production of biological pesticides

11. Technologies for the production of bio-fertilizers

12. Bio-technologies for treatment of wastes (solid or liquid)

13. Technologies for the production of hormones controlling fishes� unisexuality;

14. Technologies for breeding and transplanting zygotes of buffaloes, cows and goats;

15. Technologies for the production of nutritious preparations (from animals and plants) in service of the protection of human and domestic animal health.

Appendix 4

LIST OF NEW TECHNOLOGIES FOR THE MANUFACTURE OF INFORMATION AND TELECOMMUNICATIONS EQUIPMENT

1. ATM (asynchronous transfer mode) technology;

2. SDH (synchronous digital hierarchy) technology;

3. Technologies for the manufacture of optical-fiber, cable;

4. Technologies for the manufacture of electronic digital switchboards with a high capacity (10,000 numbers or more) and capable of providing multimedia services, being used in the intelligent network (IN) and the band-width integrated services digital network (B-ISDN);

5. Technologies for the manufacture of intelligent circuit-switching systems (according to the neuron principle);

6. Technologies for the manufacture of high-speed photo and radio transmission equipment;

7. Technologies for the manufacture of multimedia terminal equipment, network-accessing equipment, and terminal equipment of the satellite and space communication systems;

8. Technologies for the manufacture of global mobile phones;

9. Laser information technologies;

10. Technologies for the manufacture of encrypted transmission and reception devices in different waves.

Appendix 5

LIST OF ELECTRONIC AND INFORMATIC TECHNOLOGIES

1. Technologies for the manufacture of photo-electronic and mecho-photo-electronic components;

2. Technologies for the manufacture of flat screens and high-definition screens;

3. Technologies for the manufacture of ICs;

4. Technologies for the manufacture of sensors;

5. Technologies for the manufacture of multi-functional and integrated receivers (TV-video-monitor...);

6. Technologies for the manufacture of high-grade medical electronic equipment (scanner, electrocardiograph, electroencephalograph, endoscope, microsurgery...);

7. Technologies for the manufacture of hard disk drives, technologies for the manufacture of laser disks;

8. Technologies for the manufacture of computers and peripheral devices;

9. Technologies for the manufacture of large-capacity RAM;

10. Technologies for the manufacture of digital electronic measuring devices;

11. Technologies for electronic mechanic processing with laser and plasma rays;

12. Technologies for the manufacture of robots in service of production automation;

13. Technologies for the manufacture of software products, especially multimedia-oriented software technologies;

14. Technologies for the manufacture of simulation mechanisms;

15. Technologies for the manufacture of human-robot communication systems with the aid of language and images.-